FINANCIAL FUTURE PROSPECT INVESTIGATION USING BANKRUPTCY FORECASTING MODELS IN HUNGARIAN MEAT PROCESSING INDUSTRY

Dalma Peto () and Andrea Rozsa ()
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Dalma Peto: cost accountant, JABIL Circuit Hungary,
Andrea Rozsa: University of Debrecen, Faculty of Economics, Institute of Accounting and Finance,

Annals of Faculty of Economics, 2015, vol. 1, issue 1, 801-809

Abstract: Our main research topic is the analysis of leading companies in the Hungarian meat processing industry in terms of liquidity criteria. We examine this scientific subject by application of financial indicators and several important bankruptcy forecasting models. In our thesis the emphasis is placed on the presentation and evaluation of business failure models. The topicality of the research subject is rooted in the economic crisis and recession, which made solvency a key issue. Maintaining the competitive position in the market and the ability to stay in competition depend on the capability to generate an appropriate level of net operative cash flow. The most important research questions are the following. Which financial methods can be used to predict and estimate the situation when a company is facing bankruptcy? Do bankruptcy forecasting models provide accurate forecasts and what conclusions can be drawn based on these results? In our study we present the actual economic situation and the main problems of the sector, select the sample companies, calculate and compare the applied financial ratios and the most relevant bankruptcy forecasting models. On the basis of annual reports concerning 2010-2013 interval we investigate the financial position of leading pork processing companies. We make a comprehensive and comparative analysis concerning capital structure, liquidity, and profitability; consequently identify risky processes and companies having high probability of insolvency. Finally, we demonstrate and evaluate the results of three traditional bankruptcy forecasting models (Altman, Springate, and Fulmer) and four modern models (DA, LR, industrial DA and industrial LR).

Keywords: financial analysis; bankruptcy models; meat processing industry; Hungary (search for similar items in EconPapers)
JEL-codes: G30 G33 L66 M21 (search for similar items in EconPapers)
Date: 2015
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ora:journl:v:1:y:2015:i:1:p:801-809

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